First Hawaiian(US:FHB)2025-10-24 18:02Financial Data and Key Metrics Changes - Net income increased compared to the second quarter, driven by higher net interest and non-interest income, partially offset by a higher effective tax rate of 23.2% in the third quarter [5][6] - Total loans declined by approximately $223 million, primarily in commercial and industrial (C&I) loans [6][7] - Net interest income was $169.3 million, an increase of $5.7 million from the prior quarter, with a net interest margin (NIM) of 3.19%, up 8 basis points [9][10] Business Line Data and Key Metrics Changes - Total deposits increased by about $500 million in the third quarter, with commercial deposits rising by $135 million, while retail deposits declined by $43 million [8] - Non-interest income was $57.1 million, benefiting from higher swap income due to favorable market movements [10] Market Data and Key Metrics Changes - The state unemployment rate was 2.7% in August, lower than the national rate of 4.3%, with total visitor arrivals up 0.7% year-over-year [4] - Year-to-date visitor spending reached $4.6 billion, an increase of 4.5% compared to the same period last year [4] Company Strategy and Development Direction - The company aims to maintain a strong credit performance and is open to M&A opportunities, focusing on the mainland due to market share constraints in Hawaii [66][84] - The company is looking to grow loans in areas where it has expertise, such as residential pools of Hawaii loans [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the local economy's resilience despite potential hardships from a federal government shutdown [68][70] - There is an expectation of strong loan growth in the fourth quarter, with a focus on maintaining and strengthening community relationships [22][23] Other Important Information - The company repurchased approximately 965,000 shares at a total cost of $24 million, with $26 million remaining under the approved stock repurchase plan [6] - The allowance for credit losses decreased to $165.3 million, with coverage remaining at 117 basis points of total loans and leases [12] Q&A Session Summary Question: Growth outlook and pipeline demand - Management noted significant paydowns in dealer floor plans and expressed bullishness about the pipeline, expecting strong production in the fourth quarter [18] Question: Core deposit growth and liquidity deployment - Management highlighted success in core deposit growth driven by retail and commercial teams, with expectations of flat total balances by year-end [21][22] Question: NIM management amid Fed cuts - Management indicated that NIM expansion could continue depending on the timing and magnitude of Fed rate cuts, with sufficient loan growth to support this [25][30] Question: M&A strategy and criteria - The company remains open to M&A discussions, focusing on opportunities in the mainland and Western States [66][84] Question: Impact of federal spending and local economy - Management believes the long-term trend of defense-focused federal spending in Hawaii will remain strong, with no significant changes expected [74]